UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from______________to_______________
Commission file number 0-18127
AMERICAN BANCORP OF NEVADA
(Exact name of registrant as specified in its charter)
Nevada 94-2792608
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4425 Spring Mountain Road, Las Vegas, Nevada 89102
(Address of principal executive offices) (Zip Code)
(702) 362-7222
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of September 30, 1995:
Common stock, $.05 par value 3,168,293
- ---------------------------- ---------
Class Number of Shares
I FINANCIAL INFORMATION
AMERICAN BANCORP OF NEVADA AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS AND QUARTERS ENDED SEPTEMBER 30, 1995
AND 1994 (Dollars in thousands except for
earnings per share)
(Unaudited)
For the Nine For the
Months Ended Quarter Ended
September 30, September 30,
--------------------------- ---------------------------
1995 1994 1995 1994
-------- -------- ------- ---------
INTEREST INCOME
Interest and Fees on Loans ............................ $ 8,601 $ 5,967 $ 3,042 $ 2,243
Interest on Investment Securities ..................... 5,535 4,378 1,981 1,662
Interest on Federal Funds Sold ........................ 315 123 95 29
-------- -------- -------- --------
Total Interest Income ................................. 14,451 10,468 5,118 3,934
-------- -------- -------- --------
INTEREST EXPENSE
Interest on Deposits .................................. 3,798 2,083 1,352 770
Interest on Securities Sold Under
Agreement to Repurchase .............................. 712 273 306 125
-------- -------- -------- --------
Total Interest Expense ................................ 4,510 2,356 1,658 895
-------- -------- -------- --------
NET INTEREST INCOME .................................... 9,941 8,112 3,460 3,039
Provision for Loan Loss ............................... (420) (20) (150) 80
-------- -------- -------- --------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSS .......................................... 9,521 8,092 3,310 3,119
TOTAL NON-INTEREST INCOME: ............................. 1,055 1,265 305 403
TOTAL NON-INTEREST EXPENSE: ............................ 6,426 6,096 2,147 2,165
-------- -------- -------- --------
INCOME BEFORE TAXES .................................... 4,150 3,261 1,468 1,357
PROVISION FOR INCOME TAXES ............................. (1,071) (840) (340) (375)
-------- -------- -------- --------
NET INCOME ............................................. $ 3,079 $ 2,421 $ 1,128 $ 982
======== ======== ======== ========
NET INCOME PER SHARE ................................... $ .94 $ .77 $ .34 $ .31
======== ======== ======== ========
The accompanying notes are an integral part of these statements.
AMERICAN BANCORP OF NEVADA AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION
AT SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
(Dollars in Thousands)
(Unaudited)
September 30, December 31,
1995 1994
------------- ------------
ASSETS
Cash and Due From Banks ...................... $ 29,842 $ 22,216
Federal Funds Sold ........................... 3,050 0
--------- ---------
Total Cash and Cash Equivalents ............. 32,892 22,216
Investment Securities Available
for Sale .................................... 99,391 90,060
Investment Securities Held to
Maturity (fair market value
$25,952 at September 30, 1995,
$26,147 at December 31, 1994) ............... 25,727 26,603
Net Loans and Leases ......................... 95,149 75,378
Premises and Fixed Assets, Net ............... 10,280 9,566
Other Assets ................................. 3,115 3,596
--------- ---------
TOTAL ASSETS ................................. $ 266,554 $ 227,419
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits ..................................... $ 206,357 $ 192,811
Securities Sold Under
Agreements to Repurchase .................... 33,620 13,780
Other Liabilities ............................ 1,210 697
--------- ---------
TOTAL LIABILITIES ............................ $ 241,187 $ 207,288
--------- ---------
STOCKHOLDERS' EQUITY
Unrealized Gain (Loss) on
Available for Sale
Securities .................................. $ 105 $ (1,988)
Common Stock ................................. 159 119
Surplus ...................................... 20,110 20,084
Retained Earnings ............................ 5,128 2,051
Less Treasury Stock .......................... (135) (135)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY ................... $ 25,367 $ 20,131
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY ........................ $ 266,554 $ 227,419
========= =========
The accompanying notes are an integral part of these statements.
AMERICAN BANCORP OF NEVADA AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Dollars in Thousands)
(Unaudited)
Nine Months Ended
September 30,
------------------------
1995 1994
-------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Interest received ................................ $ 13,778 $ 10,059
Other income ..................................... 1,007 1,050
Interest paid .................................... (4,482) (2,332)
Cash paid to suppliers and employees ............. (5,619) (4,334)
Income taxes paid ................................ (928) (1,157)
-------- --------
Net cash provided by operating activities ........ 3,756 3,286
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales and maturities of
investment securities ........................... 51,867 76,364
Purchase of investment securities ................ (57,019) (79,759)
Net increase in loans made
to customers .................................... (20,169) (12,850)
Capital expenditures ............................. (1,210) (733)
Proceeds from sale of R.E.O ...................... 0 188
-------- --------
Net cash used in investing activities ............ (26,531) (16,790)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits .................. 13,546 17,296
Net increase(decrease) in federal funds
purchased and securities sold under
repurchase agreements ........................... 19,840 (1,770)
Other ............................................ 65 (496)
-------- --------
Net cash provided by financing activities ........ 33,451 15,030
-------- --------
NET INCREASE IN CASH AND DUE
FROM BANKS AND FEDERAL FUNDS SOLD ............... 10,676 1,526
CASH AND DUE FROM BANKS AND FEDERAL
FUNDS SOLD AT JANUARY 1 ......................... 22,216 22,473
-------- --------
CASH AND DUE FROM BANKS AND FEDERAL
FUNDS SOLD AT SEPTEMBER 30 ...................... $ 32,892 $ 23,999
======== ========
(Continued)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Nine Months Ended
September 30,
-----------------------
1995 1994
-----------------------
RECONCILIATION OF NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Net income ......................................... $ 3,079 $ 2,421
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization of
property and equipment ........................... 495 495
Amortization of investment security
premiums and accretion of discounts .............. (153) (143)
Provision for loan loss ........................... 420 20
Deferred loan fees ................................ (22) 84
Gain on sale of investment securities ............. 20 53
Decrease (increase) in other assets ............... (596) 535
Increase (decrease) in other liabilities .......... 513 (179)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES .......... $ 3,756 $ 3,286
======== ========
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Stock dividends issued ............................. $ 3,826
Issuance of common stock for
stock split ....................................... $ 39,600
The accompanying notes are an integral part of these statements.
AMERICAN BANCORP OF NEVADA AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(Unaudited)
FINANCIAL INFORMATION
NOTE A - PRINCIPLES OF CONSOLIDATION
The condensed consolidated financial statements include the
parent holding company ("Company") and its wholly owned subsidiaries,
American Bank of Commerce ("Bank"), AmBank Mortgage Company ("Mortgage
Company") and AmBank Financial Company ("Finance Company"). Material
intercompany balances and transactions have been eliminated.
NOTE B - BASIS OF PRESENTATION
In the opinion of management ("Management"), all adjustments
(consisting only of normal recurring accruals) considered necessary
for a fair presentation have been reflected in the financial
statements. The results of operations for the three and nine months
ended September 30, 1995, are not necessarily indicative of the
results to be expected for the full year.
NOTE C - INCOME PER SHARE
Net Income Per Common Share is based upon the weighted average
number of common and common equivalent shares outstanding, 3,259,529
and 3,055,984 for the three months ended September 30, 1995 and 1994,
respectively .
The weighted average number of common shares, common
shares outstanding and earnings per share are adjusted to reflect a 4
for 3 stock split declared on March 20, 1995, to stockholders of
record as of April 4, 1995.
NOTE D - ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1995 the Company adopted FASB Statement No.
114, Accounting by Creditors for Impairment of a Loan and FASB
Statement No. 118 which amended certain provisions of FASB No. 114
with respect to income recognition and disclosures. The Company has no
loans which it considers to be impaired under the definitions of FASB
Statements No. 114 and No. 118 and therefore the adoption of these new
accounting pronouncements did not have an effect on the Company's
consolidated financial statements.
The Financial Accounting Standards Board has also approved,
effective for years beginning after December 15, 1995, Statement No.
121, Accounting for the Impairment of Long-Lived Assets to Be Disposed
Of and Statement No. 122, Accounting for Mortgaging Servicing Rights.
FASB Statements No. 121 and 122 are not expected to have a material
effect on the consolidated financial statements when adopted.
ITEM II
- -------
AMERICAN BANCORP OF NEVADA AND SUBSIDIARIES
The following is Management's discussion and analysis of certain significant
factors which affected the company's financial position and operating results
during the period in the accompanying condensed consolidated financial
statements.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Nine Months Ended September 30, 1995
- ------------------------------------
Asset Growth
- ------------
Total assets increased $39,135,000 or 17.21% during the first nine months of
1995. The primary elements of this growth were a $19,771,000 or 26.23% increase
in Net Loans and Leases, a $8,455,000 or 7.25% increase in Investment
Securities, a $7,626,000 or 34.33% increase in Cash and Due From Banks and a
$3,050,000 increase in Federal Funds Sold. Asset growth was driven by the
increases in Deposits and Securities Sold Under Agreements to Repurchase of
$33,386,000 or 16.16%. Both deposits and loans continue to increase as a result
of the Bank's aggressive business development efforts, successful
operation,increased recognition throughout the business community and the
overall strength of the Las Vegas economy.
Interest Income
- ---------------
Total interest income increased $3,983,000 or 38.05% in the first nine months of
1995 when compared to the same period of 1994 and increased $1,184,000 or 30.1%
for the quarter ended September 30. It is anticipated that interest income will
continue to increase due to the growth in Investment Securities and Net Loans
and Leases. Total interest income is composed of the following categories:
Interest and Fees on Loans: Interest and fee income increased by $2,634,000
or 44.14% during the first nine months of 1995 as compared to the same period of
1994, and increased $799,000 or 35.62% for the quarter ended September 30. The
year-to-date increase is comprised of a $41,000 increase in fee income and a
$2,593,000 increase in interest on loans. Fee income increased due to an
increase in loan demand. Interest on loans increased due to an increase in
average loan volume of $21,434,000 to $88,389,000 and an increase in the yield
from 9.51% in 1994 to 11.11% in 1995 a net increase of 1.6%. The quarter to date
change is composed of a $5,000 decrease in fee income and a $804,000 increase in
interest income. Fee income decreased due to a decrease in new loan demand for
the quarter. Interest on loans increased due to an increase in the yield from
10.12% for the quarter ended September 30, 1994 to 11.05% for the same period
1995, a net increase of 0.93%. This represents an increase in income of
$166,000. The average loan volume increased to $94,506,000 from $71,441,000 an
increase of $23,065,000 or 32.29% which represents an increase in income of
$638,000.
Interest on Investment Securities: The Bank continues to invest its excess funds
in interest bearing securities. Interest on securities increased by $1,157,000,
or 26.43%, in the first nine months of 1995 as compared to the same period in
1994. This was the result of an increase of $6,449,000 in average volume of
investments to $125,376,000, coupled with an increase in yield from 4.91% to
5.89%. The increase in yield is attributable to the reinvestment of maturing
securities and pay downs of the mortgage backed portfolio. The mix of the Bank's
investment portfolio remains consistent with the prior year. The tax-equivalent
yield increased from 5.37% to 6.31%. Comparing the quarter ended September 30,
1995 to September 30, 1994, interest income increased $319,000 or 19.19%. The
average volume increased $6,970,000 to $132,686,000 coupled with an increase in
the yield to 5.97% from 5.29%. The Bank's current investment strategy is to
maintain an investment portfolio with rather short maturities. At this time the
relative flatness of the yield curve does not warrant increased risk or
extending the overall maturity of the portfolio. Management continually monitors
these and other factors when evaluating investment strategies and asset
liability management.
Interest on Federal Funds Sold: Interest earned on Federal Funds Sold increased
$192,000 or 156.1%, in the first nine months of 1995 as compared to the first
nine months of 1994. This increase was due to an increase in the average
interest rate from 3.53% to 5.76% for Federal Funds Sold. Comparing the quarter
ended September 30, 1995 with the same period of the prior year, interest income
increased $66,000 or 227.59%. This increase is attributable to an increase in
the average volume of $3,956,000 or 145.55% to $6,674,000. The average yield
increased to 5.69% from 4.27%. Management's goal is to maintain a level of
Federal Funds that will enable the Bank to fund increases in loan demand and to
meet depositors' needs.
Interest Expense
- ----------------
Total interest expense increased $2,154,000, or 91.43%, during the first nine
months of 1995 as compared to the first nine months of 1994. Interest on
deposits increased $1,715,000 or 82.33% due to an increase in the average
balances of interest bearing accounts by $17,550,000 to $128,860,000. The
average rate paid on deposits increased from 2.5% in 1994 to 3.93% in 1995.
Interest on securities sold under agreements to repurchase increased $439,000 or
160.81% as the average volume increased $8,899,000 to $22,334,000 and the
average interest rate increased from 2.71% to 4.25%. Total interest expense for
the quarter ended September 30, 1995, increased $763,000 or 85.25% when compared
to the same period of 1994. Interest on deposits increased $582,000 or 75.58%
due to an increase in the average balances of $15,496,000 to $132,128,000. The
average rate paid on deposits increased to 4.09% from 2.64%. Interest on
securities sold under agreements to repurchase increased $181,000 or 144.8% as
the average volume increased $12,459,000 to $28,511,000. The average rate paid
increased 1.17% to 4.29%. Management believes that the average volume of
deposits and repurchase agreements will continue to increase during 1995.
Interest Rate Risk
- ------------------
Management attempts to protect earnings from wide shifts in interest rates by
employing the following strategies:
Loans: Approximately 88.22% of the bank's loan portfolio is written on an
adjustable basis that floats with the prime rate. Thus, approximately
$85,525,000 reprices immediately upon a change in base.
Investments: The majority of the investment portfolio of the Bank is of a fixed
rate nature. This enables Management to provide an underlying level of income
irrespective of changes in rates. Additionally, the average life of the
portfolio is 1.62 years. This strategy of maintaining short maturities provides
maximum flexibility in dealing with fluctuating interest rates.
Deposits: Management discourages use of long term Certificates of Deposit by
consistently paying at or below market rates and not offering greater than one
year maturities. However, an attempt is currently underway to recapture some of
the jumbo short-term Certificates of Deposit market. Offering rates for
Certificates of Deposit over $100,000 and less than one year maturity are
reviewed weekly for adjustments. At September 30, 1995, approximately 54% of
time deposits over $100,000 had a maturity of three months or less.
The above factors, taken into consideration together with the fact that the
Bank's non-interest bearing customer deposits are approximately 39.79% of total
deposits, provides Management the opportunity to maintain favorable net interest
margins under most normal interest rate scenarios.
Provision for Loan Losses
- -------------------------
The provision for loan losses in the first nine months of 1995 was $420,000,
$400,000 more than the first nine months of 1994. Net charged off loans and
leases were $31,000 through September 30, 1995, and ($67,000) through September
30, 1994. The allowance for loan loss was 1.16% of loans outstanding at
September 30, 1995, as compared to 0.92% at September 30,1994.
At September 30, 1995, no loans were accounted for on a non-accrual basis and no
loans were past due 90 days or more, or classified as doubtful.
Additionally, at September 30, 1995, Management classified 15 loans as
substandard, for an aggregate of $1,215,000. This amount represents 1.25% of
outstanding loans.
Management reviews the loan loss analysis on a quarterly basis. A percentage of
the loss reserve is allocated to pass credits, classified credits, doubtful
credits, and loss credits. Management made a conscious decision to increase the
level of reserve as a percentage of net loans. This was due to the rapid growth
of the portfolio and the changing mix of loans within it.
Management reviews portfolio concentration levels on a regular basis and
appraisal reviews are performed to support the values at which loans are carried
in the portfolio. Construction lending is generally focused on entry level and
first move-up homes. Lending for larger, speculative homes is tightly limited to
financially sound borrowers. Commercial real estate lending is generally limited
to owner-occupied properties.
Management believes the current allowance of $1,116,000 is adequate and that
there is sufficient unallocated allowance to handle unexpected problems within
the portfolio.
The table below details the amount of loans charged to reserve and the additions
to the allowance for possible loan loss for the nine months ended September 30,
1995.
Allowance for Loan Losses, January 1 ........................ $ 727,000
Deduct:
Loans Charged Off During the Year .......................... (61,000)
Less Recoveries of Losses Previously Charged Off ........... 30,000
-----------
Net Loans Charged Off ...................................... 31,000
-----------
Allowance Prior to Additions ................................ 696,000
Additions to Allowance Charged to
Operating Expense .......................................... 420,000
Allowance for Loan Losses, September 30 ..................... $ 1,116,000
===========
The schedule below shows the major categories of loan charge-offs and recoveries
for the nine months ended September 30, 1995.
NET CHARGE-OFFS
Charge-Offs:
Commercial, financial and industrial ......................... $60,000
Real estate loans
Commercial (secured by real estate) .......................... 0
Construction and land development ............................ 0
Residential .................................................. 0
Loans to individuals for household
family and other personal expenditures ....................... 1,000
-------
Total ......................................................... $61,000
-------
Less Recoveries:
Commercial, financial and industrial ......................... 21,000
Real estate loans
Commercial (secured by real estate) .......................... 0
Construction and land development ............................ 0
Residential .................................................. 0
Loans to individuals for household
family and other personal expenditures ....................... 9,000
Lease financing receivables ................................... 0
-------
Total ......................................................... 30,000
-------
Net Charge-Offs ............................................... $31,000
=======
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
1995 REPORTED PERIOD
--------------------
% Of Loans In
Balance at End of Each Category
Period Applicable to: Amount To Total Loans
---------- --------------
Domestic:
Commercial, Financial and Industrial ............ $ 277,000 24.8%
Real Estate-Construction ........................ 280,000 25.1%
Real Estate-Mortgage ............................ 478,000 42.8%
Installment ..................................... 81,000 7.3%
---------- -----
Total ............................................ $1,116,000 100.0%
========== =====
Non-Interest Income
Total non-interest income for the first nine months of 1995 decreased $210,000
or 16.6% over the same period of 1994. The decrease was primarily due to a
decrease in gains on sales of securities and a decrease in Fee Income from
mortgage placement services.
Non-Interest Expense
Total non-interest expense increased by $330,000 or 5.41% during the first nine
months of 1995 as compared to the same period of 1994. This increase is due
primarily to increased salary and employee benefit expenses due to normal salary
increases.
Liquidity
Management of the Company strives to obtain the highest possible earnings while
maintaining a strong liquidity position. The policy of shorter maturities in the
Bank's security portfolio and the need for cash in Federal Funds Sold to meet
daily cash requirements continues to be met. Management continuously monitors
outstanding loan commitments and letters of credit for funding needs. At
September 30, 1995, outstanding loan commitments were $42,114,000 and letters of
credit were $2,801,000. The measures of solid liquidity practices such as Total
Deposits to Total Assets and Loans to Deposits are monitored constantly for any
adverse trends. Cash flow from operations continues to remain positive and
Management expects this trend to continue. Cash flow from investing was negative
as there was an increase in net loans made to customers coupled with an increase
in the purchase of Investment Securities compared to proceeds from sales and
maturities of Investment Securities. Cash flow from financing activities was
positive due to the increase in deposits. This trend is expected to continue.
Management believes that liquidity will remain strong in both the near-term and
the long-term.
Capital Resources
In September 1995, the Company began construction on a two-story 17,000 square
foot office complex located adjacent to its corporate headquarters site at
Spring Mountain Road and Arville. In the third quarter of 1995, the Bank
purchased approximately 4.36 acres of land in the Northwest Las Vegas area for a
new branch location to open in the third or fourth quarter of 1996. In addition,
the Bank is exploring the possibility of opening a second new branch office in
1996. This would make a total of six branches in the Las Vegas Valley area. The
impact on capital is not significant to date and is not expected to impede
operations.
At September 30, 1995, the Bank's Tier 1 Core Capital to risk weighted assets
was 17.83%, Total Capital to risk weighted assets was 18.76% and the leverage
ratio was 9.47%, all above the current minimum guidelines of 4.0%, 8.0% and
4.0%, respectively, established by regulatory authorities.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA)
defines five levels of capital for financial institutions: Well-capitalized,
Adequately capitalized, Undercapitalized, Significantly undercapitalized and
Critically undercapitalized. A bank falls into one of these levels based on its
risk-based ratio and leverage ratio. At September 30, 1995, the Bank fell in the
Well-capitalized category.
SIGNATURES
Pursuant to the requirement of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN BANCORP OF NEVADA
DATED: November 14, 1995 /s/ James V. Bradham
------------------------------
James V. Bradham
President and
Chief Executive Officer
DATED: November 14, 1995 /s/ Patricia L. Kirkwood
-------------------------------
Patricia L. Kirkwood
Executive Vice President/
Cashier